4 days ago

6 days ago

1 week ago

On Coaching Salaries And The Economy…

In the past week the salaries of Rick Barnes and Lon Kruger have drawn criticism from their respective state legislatures particularly in the case of Barnes. Throughout the country the fact that many coaches at top programs draw in CEO-like salaries has been a hot button topic in recent years especially with the prolonged downturn in the economy measured either in big picture economic terms like CPI or the more palatable unemployment numbers. That was never more clear than two years ago when Ken Krayeske challenged Jim Calhoun about his salary in the setting of the state’s budget deficit.

One of the points that Calhoun makes, which has been overlooked as people have focused on “not a dime back” jokes, is that many of the top programs bring in millions of dollars to their universities and are not subsidized in any way by taxpayer funds even though they are at state universities. That, in itself, should be enough to combat questions about whether the coaches have the right to take in that type of salary. Many of the top programs appear to be bringing in enough money so that the coach’s salaries are at least fiscally possible and some would argue reasonable although many may also express moral qualms at the way that salaries are distributed much like they do with CEOs and their disproportionately large salaries.

As you can see from recent reports on the salaries of college basketball and college football coaches, the list of those making over a $1 million per year is a relatively select group although the number in football appears to be larger (59 compared to 31 in basketball although the basketball analysis ignores coaches that did not make the NCAA Tournament). [Ed. Note: We will leave the issue of what constitutes “rich”–$1 million? $250,000?–up to President Obama and Congress.] The issue on coaching salaries is not limited just to state universities although many media members focus on those so they can try to spin the story to convince their audience that their tax dollars are going directly into pockets of some ridiculously wealthy coach who often can’t come up with decent last-second play, rather than fund an orphanage or some other more worthy endeavor. A recent IRS report indicates that Mike Krzyzewski received a total compensation of $4.7 million last year, which makes him the highest paid employee at Duke. In this case, he likely will not receive the same criticism that Barnes, and to a lesser degree Kruger, received for what many of a certain political persuasion might deem an excessively high salary partly because he is being paid by a private institution and partly because he is so successful (it helps to have the court named after you). Still we can see a few individuals particularly some of the more liberal professors at Duke (or another similar school) taking exception with the fact that the head coach of the basketball team makes more than the entirety of some academic departments.

Many athletic departments seem to be doing quite well financially

In our opinion, it seems perfectly reasonable to pay a coach these type of salaries if the funds are not coming from taxpayer dollars and if the program generates enough revenue to be able to afford to pay the coaches these salaries while keeping the program at a sustainable level. In an ideal world we would focus nearly all of our money and resources on education (and the basics of physical fitness), but it is not an ideal world and as a society we care about sports a little more than we probably should so it seems unrealistic to expect athletic programs to pull in millions of dollars and expect them to distribute money to science and art departments. The bigger and more relevant question appears to be how to spread those funds. It seems like most schools keep the money in the athletic department as part of a general fund rather than sport-specific funds. The most economically appropriate option would seem to be to allocate salaries based on the percentage of the total profit (or revenue if you want to adopt a more crude metric) that each program brought in, but that would leave many large sports (think track and swimming) that are unable to bring in much revenue out in the cold and would not be a politically viable option. In reality, the decisions on how to allocate salaries and funds between programs within an athletic department is a tricky one and goes much deeper than just the simple issue of a coach making too much money in an economic downtown. Salaries need to be viewed within the context of how a program is doing financially, which often reflects its performance on the court or field, instead of being reflective of the larger economic picture.